Column: Money is inherently risky

I wish I had a dime for every time someone has told me they want to beat the markets without taking much or any risk. Who wouldn’t want that? All the gain without any of the pain is a pretty neat trick, and there are people who promise they can deliver just that.

Please be extremely leery of them.

Don’t get me wrong, I am not implying fraud or worse. The underlying issue is the difference between relative and absolute. While an investment manager might boast of delivering above market returns with below market risk, is that really what the client wants? (Read the full article as previously published in the Montgomery Advertiser on February 27th, 2017)

Column: Anything can happen with Dow Jones

Recently, I was a speaker for what they used to call “career day” at my daughter’s high school. They now call it Kaleidoscope, or something along those lines. Regardless, I talked about my job, gave some rudimentary advice and, believe it or not, fielded a few questions. For my troubles, I got a hug, or three, and a loaf of really delicious banana nut bread.

Truthfully, they didn’t have to give me anything. I was more than happy to do it.

One young man asked me whether the Dow Jones Industrial Average (DJIA) at 20,000 would be an impediment to any future rallies this year. (Read the full article as previously published in the Montgomery Advertiser on February 20th, 2017)

Some Common Cents for February 17th, 2017

Perhaps it is a little fitting the movie with the most Oscar nominations this year, with 14, is one entitled “La La Land.” By virtually all accounts, it is more than a fine film, but I will undoubtedly wait for it to come out on Netflix or Amazon Video. While the movie industry had its second best year in history, in nominal terms, in 2016, I haven’t been inside a theater since 2014.

I say it is fitting because much of the country seems to be in la la land, particularly the stock market.

In the simplest terms, stocks rally result when more money flows into the market than comes out. Basically, there are more buyers than sellers at the time, for whatever reason. However, stock prices usually come back to a few things: corporate profits (and expectations for future profits), how much investors are willing to pay for them, and the availability of attractive investment alternatives. We all want to make it more complicated than that, and some of our jobs depend on doing so, but that is about it. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

Column: Is your smartphone holding you back?

One day this past week, I woke up in a bit of a funk. I felt like I had been juggling a couple dozen ping pong balls, and was in danger of letting some or all of them fall to the ground. When did life get so darn complicated?

Those that know me know I am not one to wax nostalgic about how life was better back in the day. I am also not one to sweat what I believe to be the small stuff. As I am prone to tell my co-workers: “the sun is going to come up in the East tomorrow whether we like it or not.”

I tried to remind myself of this as I flipped through the umpteen emails on my phone. Then it dawned on me: this thing, my phone, is killing me.  (Read the full article as previously published in the Montgomery Advertiser on February 13th, 2017)

Some Common Cents for February 10th, 2017

Yesterday, I was one of the speakers for what once was called ‘career day’ at my daughter’s high school. These days, the official name is Kaleidoscope or something more catchy along those lines. Regardless, I talked about my job, gave some rudimentary advice, and, believe it or not, fielded a few questions. For my troubles, I got a hug, or three, and a loaf of really delicious banana nut bread. Truthfully, they didn’t have to give me anything. I was more than happy to do it.

One young man asked me about Dow 20,000, and whether such a lofty level was going to be an impediment to any future rally this year. You know, that is pretty good for a high school student, really good even. I answered him as I would have an adult during the Q&A session of one of my presentations: “20,000 is just a number. If it is a psychological barrier for some barriers, then so be it. However, stock prices ultimately come back to corporate earnings. Now, will corporate earnings continue to justify 20,000? That is a different question altogether.”

Then I asked him: what if I were to tell you I fully expect the Dow to be at least 50,000 by the time I retire? His eyes, and others, boggled a little. 50,000? Who would have thought that? Particularly in such a short period of time, because that guy is really, really old!

If I retire in 17 years when I am 65, I would be kind of disappointed if it weren’t 50,000. It is just math, and here is my prediction for the Dow Industrials 17 years from today: 53,887. However, I don’t plan to ever fully retire, as I would drive my wife absolutely crazy. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

Some Common Cents for February 3rd, 2017

Ordinarily, the Employment Situation report is the biggest piece of news the first Friday of each month. Today, it isn’t, even though the Change in Nonfarm Payrolls was reasonable enough, some 226K net new jobs. So, something else, something big, must have happened, and it did.

This morning, President Trump signed an executive order basically reviewing the Dodd-Frank financial system regulatory legislation. Ostensibly, and on its face, this is the proverbial first step in rolling back or repealing it. However, since only the Congress can actually rewrite/repeal the legislation, well, the order itself isn’t as powerful as its symbolism.

Since Dodd-Frank has exploded to over 20,000 pages of text, and still growing, any significant changes or line item repeals will take a month of Sundays. So, bankers can’t rejoice just yet. Further, and I can’t believe I am actually typing this, not all of Dodd-Frank is without merit. You know, it is kind of hard to argue with making our money center banks, the truly too big to fail, hold some additional capital, etc. You know? I mean the FDIC just doesn’t have the ability to cover those guys, period.

But, as I wrote to a reporter friend of mine about an hour ago: “Over 20,000 pages of new banking rules? Think there might be some redundancy and nit-picking in there somewhere? I am not saying anything, I am just saying; if you know what I am saying.” Let’s just say the number of rules mandating redundancies are redundant. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.

Some Common Cents for January 27th, 2017

This morning, the Bureau of Economic Analysis (BEA) released its first stab at 4Q 2016 Gross Domestic Product (GDP). Since the BEA estimated the economy grew at a 3.5% annual rate for 3Q 2016, no one was expecting a huge number (or shouldn’t have). However, the 1.9% figure the BEA gave us was less than the so-called ‘consensus’ estimate of 2.2%, but it wasn’t surprising.

In fact, it was the somewhat gaudy 3Q estimate I found a little, well, head-scratching. Sure, the headline looked great, but how in the world did our trade deficit improve so much in one quarter as to add 0.85% to the 3.5% estimate? Sure, the US dollar fell a smidgeon, a smidgeon, during 3Q, but enough to engender a 14.4% annualized surge in exports (goods) and essentially no change in imports (goods)? That seemed a bit much to me, even if the various governmental agencies could support it in some form or fashion.

Historically, there tends to be some volatility with the trade data in the GDP report, if volatility is the right word. As a result, a large surge in either exports or imports in one quarter ordinarily results in a swing the opposite direction the next. Such was the case this morning. To that end, exports (goods) reportedly fell at a 6.9% clip and imports (goods) surged 10.9%. As a result, the worsening in our trade deficit during 4Q shaved a full 1.70% off the GDP equation.

In so many ways and words, the 3Q number (headline) probably overstated domestic economic growth, just as the 4Q number understated it. For the year as a whole, the BEA currently estimates GDP grew 1.6% when adjusted for inflation. This means the US economy has not grow at a 3.0% or greater clip for 11 years, as 2005 was the last turn of the calendar when we had such ‘august’ economic activity. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees. 

Column: Will Bitcoin craze last?

bitcoinWhenever I write anything about Bitcoin, I receive a number of emails from, um, well-wishers calling me any number of colorful names, to put it politely. It seems people have really strong opinions about their cryptocurrencies. Anyone who isn’t completely onboard with them is a Luddite, or worse, as I found out in no uncertain terms.

I have a friend who knows my general opinion on Bitcoin, and he has been quick to tell me how much it went up in price in 2016. Surely, this must be the start of something wonderful for his two-coin investment, and I hope it is for his sake. However, I still can’t wrap my head around cryptocurrencies as generally accepted mediums of exchange. If for no other reason, there seems to be few barriers to entry, outside of the brilliance of a handful of people smart enough to write the necessary algorithms. What are their parameters? How do we keep them from adhering to them?  (Read the full article as previously published in the Montgomery Advertiser on January 18th, 2017)

Some Common Cents for January 6th, 2017

With what I am about to write, you might think I woke up this morning in a bad mood, but I am not. The sun came up in the East, and I am standing on the right side of the Earth. Yeah, I feel pretty good, great even. I won’t lie; getting back to the standard routine of work has been, strangely enough, relaxing. Perhaps I am wired a little too tightly.

With that said, you could have knocked me over with a feather, a small one at that, this week when I read one of the first things the new Congress, the GOP controlled Congress, did was to attempt to overhaul the Office of Congressional Ethics. As the Wall Street Journal reported first thing on Tuesday 1/3/2017:

“House Republicans are moving to eliminate the independence of the Office of Congressional Ethics, the chamber’s nonpartisan ethics board, in a move that has triggered swift pushback from Democrats and government watchdog groups.

‘Democrats created the Office of Congressional Ethics in March 2008, after they took control of Congress in 2007, saying they wanted to help clean up Congress and make the ethics process more transparent. If the office believes it has found violations, its job is to recommend a formal investigation by the traditional House Ethics Committee. …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees. 

Some Common Cents for December 30th, 2016

happy-new-year-2017-wallpaper_16We will undoubtedly remember 2016 as one of the more confounding, frustrating, and tumultuous years in our nation’s peacetime history. I think it fair to say most of us, if not all, felt some measure of significant angst, if not disillusionment, at some point over the last 12 months. I would further argue, when taken as a whole, most of us will be happy to see 2016 in the rearview mirror, regardless of any personal successes we might have had along the way.

One of the things I am most saddened about is Thomas Sowell’s retirement from his syndicated column. I was a huge fan, and have read any number of his books. His work Basic Economics: A Common Sense Guide to the Economy is the only ‘business’ book I consistently recommend without reservation or qualification.

What was strange about his retirement was I didn’t see it coming. He had written a “Random Thoughts” column only the day prior to his last, and off cycle, one. The former wasn’t one of his best, as he came across somewhat surly and curmudgeonly. Here are a few excerpts: …Read More…

The opinions expressed within this report are those of John Norris as of the initial publication of this blog. They are subject to change without notice, and do not necessarily reflect the views of Oakworth Capital Bank, its directors, shareholders, and employees.